need today
David Hwu
SaturdayNov 28 at 9:49am
Within the government contract bidding process, we call companies that underbid as best cost or best value. This practice is frown upon as it undercuts the actual performance needed to successfully manage and conduct business with the right set of workforces that is needed. Larger companies tend to over promise and under deliver just to win a contract to be able later to collect the past performance or past reference to allow them to compete with other government contacts.
Business's main goal is to maximize profits and this should be for every business transaction, sometimes it pays greater long-range dividends to build relationships than it does to maximize profit. In the example of submitting a lower bid on a work contract to create goodwill, the business consciously makes the decision that gaining business in the future is more important than generating maximum revenue for a particular transaction. Once the business has built a relationship with the customer and established their goodwill, the opportunity for future business increases, and bids for work contracts can be submitted that will maximize profit. Establishing goodwill is not the only reason that business will submit bids that do not maximize profit. This will be done to win contracts to keep the business from having to lay off workers and shut down production lines, which has a negative effect on the opportunity revenues of the business (Douglas, 2012). I believe if a company is able to lower the cost of the bid due to technology factors or able to remove fringe cost and not lower the overall quality of service required would be a good business practice. If the company submits a bid that is too low, it may look to cut corners to save money and not deliver a quality product. This would have the opposite effect of establishing goodwill and may cause the company’s reputation to suffer.
In my personal example when an incumbent company loses a bid to another contract vendor due to a lower bid cost, this means layoffs and new management staff that can disrupt the overall quality and execution of the overall project.
References
Douglas, E. (2012). Managerial Economics (1st ed.). San Diego, CA: Bridgepoint Education
SaturdayNov 28 at 7:24pm
“Bidding on contracts can be very competitive and consist of different type of pricing decision problem that is quite commonly found in business-to-consumer (B2C), business-to-business (B2B), and business-to-government (B2G) transactions” (Douglas, 2012). Expansion is always happening worldwide as each city wants to attract new citizens to be included in their population. In Ohio, due to the expansion and remodeling of our city, our interstate highways, roadways, and streets consist of lots of construction. Lots and lots of construction cones are placed out on highways when workers are working mainly for safety reasons. Lots of signs are also placed to inform drivers of lane shifts, traffic changes, and/or pattern changes. Typically the government will contract the work to a construction company, provide the details of the job, the deadline the job needs to be completed by and obtain the possible start date if said construction company was selected to do the job. Typically the start date for a new project can depend on various items such as current projects contracted out by that said company and how many employees are available with skills to get the job.
When new contracts become available, the company that gets the assignment is the one that offered the least cost in the payout. At end of the day organizations and those who offering government, contracts have to think about the bottom line. Ideally, organizations have a maximum amount they’re willing to pay to get a job done, however, the assignment will go to a company that's offering a lower price to maximize their profits. By contactors lowering pricing, this builds the value of goodwill. Contractors know how much their services go for, however thinking long-term is what benefits them greatly. By doing a favor for the organization now and lowering its price, repeat business can occur. Everyone knows in personal or business life to remember the name or company who saved them money. Lowering costs for one assignment is building goodwill and helps obtain future assignments and profits. I would definitely use this strategy and bid lower when bidding on contracts to build goodwill and future business opportunities.
Reference
Douglas, E. (2012). Managerial Economics (1st ed.) [Electronic version]. Retrieved from https://content.ashford.edu/
SaturdayNov 28 at 10:05am
Using existing product and re-marketing the brand is a common practice that companies uses as another tool to increase value, new revenue stream, and stay competitive within the market. The new and improved Alka-Seltzer Plus is considered new to the market product, or a product that is just a variant of an already existing product (Douglas, 2012). Bayer has a baseline on which to establish the quality and price-position of the new and improved Alka-Seltzer Plus in the market relative to Vicks Nyquil. With an already established customer base for the original Alka-Seltzer Plus, Bayer needs to gain new customers for the improved product by setting the appropriate price. By using penetration pricing would be a way to attract new customers to the new and improved Alka-Seltzer plus. By using penetration pricing, Bayer is “setting a relatively low price to induce greater adoption by consumers and, thus, gain greater market share” (Douglas, 2012). Penetration pricing is a more long-term pricing strategy, which will allow Bayer to maximize profits over the long-term. Compared to a price-skimming strategy, sets a very high price in an effort to maximize short-term profits (Douglas, 2012). If Bayer adopted this strategy, it would probably keep its current customer base but would not attract any new customers to the new and improved product.
Proctor and Gamble should respond to this ad by re-engaging with the customers who are loyal to Vicks NyQuil by stressing the benefits of their product over Alka-Seltzer Plus. They may also want to look at their pricing strategy as well to make it more attractive to potential new customers such as change the packaging by offering smaller size or better suitable quantity.
Reference
Douglas, E. (2012). Managerial Economics (1st ed.) [Electronic version]. Retrieved from https://content.ashford.edu/
SaturdayNov 28 at 6:13pm
Taking the specific medication and brand is determined by what or how the sickness s affect you. Certain medication is given over the counter and others are not depending on the medication. Alka-Seltzer Plus has been the top notch over the counter medication that has been known to be effective for customers. Depending on what is wrong with you, there are different kinds of Alka-Seltzer brands or level that you would take for a specific purpose. The Alka-Seltzer Plus fights tough colds, flu symptoms which includes coughs, chest congestion, nasal congestion, runny nose, headache and body aches to get through your day. Knowing what you have before taking any medicine is very important. Alka-Seltzer Plus knows that their products is quality when it comes to the customers and can relieve almost all symptoms that you will encounter. Alka-Seltzer Plus is a medicine that can help you get through your day with your sickness.
Bayer medicine proclaims to relief of minor aches, pains, inflammation, fever, headache, heartburn, sour stomach, indigestion, and hangovers. They have not positioned themselves well enough in the market to fight off cold and flu symptoms. Bayer focus their business on human and veterinary pharmaceutical, healthcare products seeds, biotechnology products and agriculture chemicals. Bayer is a German multinational pharmaceutical and life sciences company and one of the largest pharmaceutical companies in the world. When you compare the two and google Alka-Seltzer Plus you get pages of cold and flu products for minor to extreme cases of symptoms. Then you google Bayer they do not show you products that would focus on cold and flu. By using penetration or skimming pricing strategy it will not be fair for Bayer to use until you know if thy want to focus on more products that deal with cold and flu medicine. If Bayer decide to go with flu or cold relief medicine then they should focus on penetration pricing strategies.
In the market of cold and flu, Bayer is not strong like Alka-Seltzer in the market, so if they wanted to get strong and increase their profits so they would have to start low with their price to persuade customers to gain a stronger market share and then gradually raise prices. “Price skimming means to set a very high price that allows relatively high profit outcomes for the firm. Penetration pricing, on the other hand, means to set a relatively low price that causes more units of the product to be sold and, thus, achieve greater penetration into the market. Both of these approaches may result in profit maximization—skimming is intended to maximize profits in the short term whereas penetration pricing is intended to maximize profits over the longer term” (Douglas, 2012). I think Proctor and Gamble should respond to the ad by manufacturing a product that is more stronger to counteract the other product. Producing a medicine that can fight off a cold or flu along with market and promotion will make the product stronger and improve the market share.
Reference:
Douglas, E. (2012). Managerial Economics (1st ed.) [Electronic version]. Retrieved from https://content.ashford.edu/